KFC ditches Pepsi for Coca-Cola at US restaurants after 4 decades
Fast-food chain KFC has signed Coca-Cola as its beverage partner for US stores, bringing to a close a relationship with PepsiCo that dates back about four decades.
PepsiCo is switching KFC's beverage partner from PepsiCo to Coca-Cola in the United States, effective spring 2027. The financial specifics of the new agreement remain undisclosed. The move could pose a challenge for PepsiCo as it strives to boost soda sales domestically while grappling with high costs and the trend towards healthier choices.
PepsiCo CEO Ramon Laguarta expressed earlier this month that recovery of growth and margins is lagging more than anticipated. The partnership with PepsiCo started when PepsiCo acquired KFC in an effort to extend its reach into food and snacks. However, KFC was later spun off in 1997 but remained a beverage partner under Yum Brands.
This decision has drawn criticism, with Freedom Capital Markets' Jay Woods noting that it's unusual for two major players in the same industry to diverge so significantly. PepsiCo is also facing pressure from activist investor Elliott Investment Management, which recently acquired a stake in the company and has urged it to divest underperforming assets and enhance performance in North America.
Despite this, PepsiCo has extended beverage partnerships with Taco Bell for a decade and continues to provide soda fountains at Pizza Hut, which recently transitioned from Coca-Cola to PepsiCo. PepsiCo also runs the soda fountain at Taco Bell and has beverage agreements with sandwich chains Subway and Jersey Mike's. The Wall Street Journal first reported the development Thursday, citing sources familiar with the situation.
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